CoreWeave tumbles ~12%, sparking broader sell-off across semiconductor stocks
S&P 500 and Nasdaq post sharpest weekly declines since June; energy issues advance
U.S. equities closed lower on October 16 (local time), led by a technology sector retreat. Persisting skepticism over whether massive artificial intelligence (AI) investments will translate into tangible profits intensified selling pressure. Meanwhile, rising international oil prices heightened inflation anxieties, further weighing on investor sentiment.
The Dow Jones Industrial Average fell 175.28 points, or 0.34%, to finish at 52,002.41. The S&P 500 dropped 84.62 points, or 1.09%, to 7,659.44, while the Nasdaq Composite tumbled 573 points, or 2.15%, to 26,140.03.
The weakness in AI-related shares coincided with mounting concerns over the financial capacity required to sustain expanding capital expenditures. The market's primary focus has shifted to how quickly astronomical spending on data centers and semiconductors will convert into actual earnings. Companies with heavy debt reliance face escalating interest burdens amid prolonged high interest rates, keeping investors cautious regarding profitability and financing conditions.
AI infrastructure provider CoreWeave plummeted approximately 12%, pushing its cumulative losses over the past five sessions to roughly 25%. Corporate bond prices for the company also dropped sharply this week, sending certain yields above 15%. The Philadelphia Semiconductor Index sank about 3.8%, extending its losing streak to eight consecutive sessions.
Declines across major semiconductor names were pronounced. AMD dropped roughly 6%, Intel fell 5.8%, Micron Technology lost 5.6%, and Broadcom retreated 4.5%. Conversely, energy giants ExxonMobil and Chevron bucked the tech-led trend, rising about 2.5% and 2.6%, respectively.
International crude prices surged amid supply jitters surrounding Middle Eastern geopolitics and Russian energy infrastructure. Front-month West Texas Intermediate (WTI) crude climbed approximately 3.5% to settle at $101.41 a barrel, while front-month Brent crude advanced about 3.7% to $109.86. While higher oil prices bolstered profit expectations for exploration and production firms, they simultaneously exacerbated cost and inflationary pressures across the broader economy.
Uncertainties surrounding monetary policy also lingered. Speaking in Bangkok, Thailand, Federal Reserve Chair Kevin Warsh acknowledged the resilience of the U.S. economy while refraining from providing specific guidance on future interest rate decisions. He noted that while accelerated investments in AI and other sectors could enhance long-term productivity, they may temporarily stoke demand and exert upward pressure on inflation in the near term.
The yield on the benchmark 10-year U.S. Treasury note hovered near 5.09%, showing little change from the previous session. Despite the relatively subdued movement in sovereign yields, the tech sector sell-off persisted.
On a weekly basis, the Nasdaq declined 4.48% and the S&P 500 fell 1.95%, marking the worst weekly performance for both indexes since June. Meanwhile, the Dow added 0.67%. As losses concentrated heavily in tech-heavy benchmarks, sector divergence remained stark.
